[1] The Appellant
Atlantis Health Spa Ltd. (Atlantis) has filed an appeal with the Island
Regulatory and Appeals Commission (the Commission) under section 28 of the
Planning Act,
R.S.P.E.I. 1988, Cap. P-8, (the
Planning Act).
Atlantis' Notice of Appeal was received on November 16, 2011.An amended Notice of Appeal was filed on February 17, 2012.

[2]On
August 10, 2011, Atlantis submitted a proposal to the City of
Charlottetown (the City) to construct a mixed-use building consisting of
commercial, office and residential uses on a portion of parcel number
841536 (the subject property).
The subject property consists of the area of land between Atlantis'
existing condominium building and Founder's Hall.In order for Atlantis' proposal to proceed, an amendment of
Appendix G, List of Approved Properties in the Comprehensive Development
Area Zone and their Permitted Uses of the City's Zoning and Development
Bylaw (the Bylaw) would be required.The City's planning staff and its Planning Board recommended
approval of this amendment to the Bylaw.On November 14, 2011, the City's Council rejected Atlantis' request
for this amendment to the City's Bylaw.

[3] This
appeal was heard on February 22, 24, 27 and March 5, 2012.Written submissions were received from Atlantis on March 19, from
the City on March 30 and a rebuttal submission from Atlantis on April 10,
2012.

2. Discussion

Atlantis' Submissions

[4] Atlantis filed a highly detailed written
submission.At the end of this
submission is a succinct conclusion which is reproduced below:

The City's
Submissions

[5] The City also filed a highly detailed
written submission. The City's succinct concluding paragraphs are
reproduced below:

Members of the
Public

[6] The Commission heard from two members of
the public. Mr. Martin thanked the Commission for the opportunity to
attend the hearing. Mr. Briggs' comments addressed the specific subject
matter of the appeal. He told the Commission that he lives in an
adjacent condominium development. He noted that there was no guarantee
for Atlantis to receive approval for a second building when Atlantis
purchased the subject property. He suggested that perhaps a better
concept plan could be obtained rather than a parking lot or Atlantis'
present proposal. He submitted that the City's waterfront needs high
standards, that proposed development be scrutinized with respect to its
surroundings and that the City's Council listened to area residents.

3. Findings

[7] After a
careful review of the evidence, the submissions of the parties, and the
applicable law, it is the decision of the Commission to allow the
appeal. The reasons for the Commission's decision follow.

[8] Appeals under the
Planning Act take
the form of a hearing de novo before the Commission. In an often
cited decision which provides considerable guidance to the Commission,
In the matter of Section 14(1) of the Island Regulatory and Appeals Commission
Act
(Stated Case), [1997] 2 P.E.I.R. 40 (PEISCAD), Mitchell, J.A. states for
the Court at page 7:

it becomes apparent that the Legislature
contemplated and intended that appeals under the Planning Act
would take the form of a hearing de novo after which IRAC, if it so
decided, could substitute its decision for the one appealed. The
findings of the person or body appealed from are irrelevant. IRAC
must hear and decide the matter anew as if it were the original
decision-maker.

[9] In previous appeals, the Commission has found
that it does have the power to substitute its decision for that of the
municipal or ministerial decision maker. Such discretion should be
exercised carefully. The Commission ought not to interfere with a
decision merely because it disagrees with the end result. However, if
the decision maker did not follow the proper procedures or apply sound
planning principles in considering an application made under a bylaw
made pursuant to the powers conferred by the
Planning Act, then
the Commission must proceed to review the evidence before it to
determine whether or not the application should succeed.

[10 However, a consideration as to whether or
not a decision maker followed "the proper procedures" ought not to be
viewed narrowly to include only ascertaining that the required notices
were issued and other preliminary steps taken. Rather, "proper
procedure" applies to the entire decision making process, from receipt
of an application to the rendering of a decision. The decision maker
must always follow the applicable law.

[11] The Commission examined a two-part test which
serves as a guideline in determining appeals under the
Planning Act:

Whether the municipal authority, in this case
the City, followed the proper process and procedure as required in
its Bylaw, in the
Planning Act and in
the law in general, including the principles of natural justice and
fairness, in making a decision on what is essentially a rezoning and
a bylaw amendment application; and

Whether the City's decision with respect to the
proposed rezoning and bylaw amendment has merit based on sound
planning principles within the field of land use and urban planning
and as enumerated in the Official Plan.

[12] Section 28 of the City's Bylaw sets out a
detailed process with respect to amendments and approvals within the CDA
zone. The subject property is in a CDA zone. Given the importance of
this section, and the unique process pertaining to the CDA zone, section
28 is reproduced in its entirety.

SECTION 28 COMPREHENSIVE DEVELOPMENT AREA
(CDA)

28.1 PERMITTED USES

Uses permitted in a CDA Zone Shall be those
approved by Council and May include any Uses or Mix of Uses allowing
in any zone of this Bylaw and Innovative mixed-Use Developments and
Council Shall give due consideration to other sections of this
bylaw, but Council May approve any Use or Development in a CDA Zone
which it deems to be in the public interest notwithstanding all
other sections of this bylaw but only after following the procedures
sections of this Section 28.

28.2 DEVELOPMENT CONCEPT PLAN

Development within a Comprehensive
Development Area Shall be subject to the approval by Council of a
Development Concept Plan and any attached schedule and the
applicable Development Agreement entered into pursuant to section
28.6.2. Appendix "G" comprises a list of approved properties in the
Comprehensive Development Area zone and their permitted uses.

28.3 DEVELOPMENT APPLICATIONS IN THE CDA
ZONE

.1 No Development consisting of new
Buildings or the demolition or relocation of Buildings Shall take
place in a Comprehensive Development Area until a Development
Concept Plan has been proposed and adopted by Council.

.2 The Council, before approving a
Development Concept Plan, Shall consider the following:

(a) the Maintenance of Design Standards
of the proposed Buildings and their acceptability with respect
to land Uses and the character and scale of Existing and
proposed Development in the vicinity;

(b) the preservation of Existing site
features of unique quality and the preservation of the natural
beauty of the area;

(c) the type of Ownership;

(d) the proposed population density of
the area, the floor space ratio, the adequacy of Open Space
areas, Building form, Parking, pedestrian walkways, Streets,
water supply, sanitary and storm sewers; and

(e) any other factors recommended by
Planning Board.

.3 Applicants for Development approval in
the CDA Zone May put forward Development Concept Plans, and such
Development Concept Plans, if approved by Council, Shall serve as
the elements of a Development Concept Plan for the portion of the
zone in which they are situated.

.4 Development Concept Plans for sites in
the CDA Zone Shall be prepared having regard to the site Development
principles as set out in Section 4.60 of this By-law.

28.4 REQUIREMENTS

A comprehensive Development Concept Plan
Shall comprise no less than 1.2 hectares (3 acres) in one (1)
contiguous area unless it constitutes an expansion of an Existing
Development Concept Plan. A Lot that is less than 1.2 hectares and
existed prior to the effective date of this By-law May submit a
Development Concept Plan.

28.5 APPROVAL PROCEDURE

.1 In considering a Development Concept Plan
put forward by an applicant, Council Shall deliberate the quality of
architectural Design of all proposed Buildings, their compatibility
with the architectural character of adjacent Development, and the
extent to which the Development Concept Plan reflects the site
Development principles as set out in Section 4 of this By-law.

.2 Subsequent to approval of the Development
Concept Plan, the working site plan and Buildings Shall be approved
on the recommendation of Planning Board for each Phase within the
Comprehensive Development Area provided it is, in the opinion of
Council, consistent with the overall Development Concept Plan and
any schedule attached thereto.

.3 Before Council approves or amends a
Development Concept Plan in a Comprehensive Development Area, a
public hearing Shall be called in the same manner, mutatis mutandis,
as if an amendment to this By-law were being considered.

.4 Changes to a Development Concept Plan
that do not change the approved intent of the Use or Lot such as
minor additions to a Building, Lot Subdivision or consolidation will
not be considered an amendment to the Development Concept Plan and
May be approved by the Development Officer.

28.6 AGREEMENTS

.1 Upon approval of the Development Concept
Plan by Council, the Development Concept Plan May be accepted by
Council resolution as all or part of a Secondary Plan.

.2 The Council Shall require the applicant
to enter into a Development agreement incorporating the terms of the
Development Concept Plan setting out the responsibilities on the
part of the applicant and Council, and Council May require such
security as May be acceptable to Council for items as shown on the
site, Building or landscape plan(s).

[13] The subject property is located within the
City's waterfront area. Section 3.5 of the City's Official Plan,
entitled "Waterfront Development" outlines a vision, goals, objectives
and policies for the City's waterfront. This section notes in part:

As recently as twenty years ago,
Charlottetown's waterfront was a working harbour characterized by
piers, warehouses, hard edges, and railways. Today, through the
determined efforts of the Charlottetown Area Development Corporation
(CADC) and others, the waterfront is still a working harbour...but
one which has capitalized on its historical legacy as the basis for
introducing a wide variety of people-oriented uses including a
boardwalk, marinas, shops, and high end open space amenities. Those
responsible for shaping the waterfront have made a conscious effort
to use its established urban fabric as historical reference points
in redevelopment efforts so as to maintain Charlottetown's ties to
its illustrious past. This has proven to be a very wise course. The
waterfront is now a place of commemoration, contemplation, and
celebration. Its success in the recent past can be measured by the
variety of people who are drawn to it, learn through it, and enjoy
the experiences offered by it.

Both the Boylan Commission and the
Stevenson-Kellogg Report pointed out that the waterfront is a key
ingredient in the healthy development of the City. Its historical
legacy, viewscape characteristics, and diverse elements are central
to Charlottetown's image and identity. The area now supports a
variety of residential, commercial, industrial, and recreational
activities...which collectively contribute to festivity and animation
along the waterfront during warm weather months. Indeed, these
mixed-use elements represent the kind of future growth and
development which best suits that part of the waterfront which
extends from the Hillsborough River Bridge to Haviland Street.
However, more attention should be paid to encouraging new
residential and commercial development in this area, as well as
year-round usage of the waterfront's facilities. Furthermore, the
City needs to continue its efforts to make the waterfront more
accessible; protect viewscape characteristics both to and from the
water; and enhance the landscaping, tree planting, and street
furniture program for the area.

[14] In the minutes of the September 7, 2011
meeting of Planning Board it was stated:

4. 4 Prince Street (PID# 841536)

This property is located in the area between
Founders Hall and the condominiums at 4 Prince Street. The property
is presently used as a parking lot. There have been previous
applications before the Board for this property. The applicant
proposes a three storey building with office/commercial on the first
floor and second floors and residential and an option for offices on
the third floor. This property is located in the CDA Zone and the
application would also require an amendment to the Waterfront
Concept Plan. Bill Chandler, architect, attended the meeting at
6:05 p.m. to present the application. The proposed building will be
long and narrow because of easements on the property. Access will
be one way in under the building on the east side and egress will be
from the parking area at the rear of the building. The first floor
of the building will contain an office and washroom for the marina
as well as small retail shops. The second floor will be office
space and the third floor will have four residential units and
possibly some office space. Mr. Chandler reviewed the concept
drawings and noted that the building exterior will have the same
elements as the condominium building but with some peaked roof areas
to break up the building to look like individual buildings instead
of one long generic building. This is not a fixed design but will
be fixed by the time of the public meeting. Mr. Chandler left the
meeting at 6:15 p.m. The Board agreed to recommend approval to
Council to proceed to the public consultation phase to consider this
application to amend a portion of the concept plan for the
waterfront.

Moved and seconded that the request to proceed
to the public consultation phase to consider an amendment to
Appendix "G" of the City of Charlottetown Zoning and Development
Bylaw - List of Approved Properties in the Comprehensive Development
Area Zone and Their Permitted Uses as well as an amendment to the
Waterfront Concept Plan to allow commercial, office and residential
units for the vacant lot adjacent to 4 Prince Street (PID# 841536)
be recommended to Council for approval.

CARRIED

[15] At its regular meeting of Council on
September 12, 2011, Council approved a request to proceed to the public
consultation phase with respect to the application by Atlantis to
develop the subject property.

[16] On October 19, 2011 the City held a public
meeting which dealt with, Atlantis' application for the subject
property. According to the newspaper notice published on October 8 and
15, 2011 (Exhibit R-1, Tab 10), Atlantis' application was one of four
items to be considered at that public meeting. Five area residents
spoke at the meeting raising concerns about Atlantis' proposed
application to develop the subject property.

[17] Following the public meeting, the City
received several written submissions opposing Atlantis' proposed
development of the subject property.

[18] In his November 7, 2011 report directed to
the City's Planning Board, Don Poole, then the City's Manager of
Planning, added to his September 7, 2011 report to Planning Board and
wrote:

The Public meeting was held on October 19,
2011 with three items on the agenda. This one received some
comments from the public but most were complaints about extraneous
issues involving the Roseport Condominiums and their issues (i.e.
potential noise during construction, traffic, visibility or views to
harbour from their building). Others mentioned there should be more
green space and we should be doing another more revised waterfront
plan. The Eastern Gateway study was sited [sic] but it did not deal
with this area and also the 500 Lot Study which we did ask them to
provide some waterfront general principles but it again did not
address specifics of this area. We do have a waterfront plan now
and in this area it shows parking or black top not landscaping as
suggested. The Developer indicated he bought the land from CADC and
he is now look [sic] to bring some commercial/offices space to the
waterfront hopefully year round tenants.

The owner would once again like to apply to
place a building on this lot with office/commercial on the first and
second floor and option of office or residential on the third
floor. This is in the CDA zone and would require an amendment to
the concept plan given the concept plan does not show a building in
this location.

The building would be stepped back between
Founders Hall and the Condominium building and not block viewscapes.
The building would be as mentioned a three story building allowing
for commercial store fronts and offices on the ground floor and
giving the building a commercial feel and would add to year around
occupation and activity just like the Spa next door. The Architect
should be available to present the building plan and elevation (not
available for mailout) at the meeting and explain the details of the
building given it is a concept building elevation at this stage.

Given the original Waterfront Plan did not
propose a building at this location it is an amendment to the plan
and would require a public meeting to consider this change. In
reality the proposed Yacht club relocation shown on the plan may
never happen either. The developer has indicated he has leased the
water lot for his marina for [the] next ten years from the Harbour
Authority, and plans to use a portion of the proposed new building
for yacht services much like Quartermaster Marine does. He does not
plan to use underground parking but instead surface parking for this
project and the building will have to meet our sea level rise for
height above grade.

This development, given it is between the
other two building[s], appears to be good infill development and
provides year round occupation and activity and is stepped back far
enough from Founders Hall windows to allow a future different use
for that building and use of the windows on this side. It is also
stepped back fro[m] views from Prince Street of the harbour.

[19] In the minutes from its November 7, 2011
meeting, the City's Planning Board stated in part:

Paul Madden and Bill Chandler attended the
meeting at 5:40 pm to answer questions from the Board. Mr. Madden
provided a letter to the Board which addressed any concerns
expressed at the public meeting. As part of his
office/commercial/residential project he would, given he has leased
the waterfront from the Harbour Authority for the next 10 years,
would like to provide services (i.e. washrooms) for those people
using his boat docks. A future connection to Hillsborough Street
through his parking area as a one way access was discussed but is
beyond the scope of this application as it is currently under
different ownership.

The Board asked about the distances between
the proposed building and the existing condos and Founders Hall.
Mr. Chandler responded that the parking lots were designed to
reflect the width of City streets or approx. 65 feet. The Board
liked the design and the fact there will likely be more year-round
activity on the water front and felt it is better than a big parking
lot as in the existing waterfront plan.

The applicants left the meeting at 5:50 pm.

The Board agreed to recommend approval of
this request to Council.

[20] The November 7, 2011 minutes of Planning
Board then went on to state that the request to recommend approval of
the amendment of the Bylaw's Appendix "G" to Council was moved, seconded
and carried.

[21] The verbatim minutes of the November 14,
2011 regular meeting of Council were filed by the City's legal counsel
as part of the City's Record and are contained at Tab 23 of Exhibit R1.
The verbatim minutes shed light on Council's discussions with respect to
Atlantis' application. While these verbatim minutes are lengthy, the
Commission is of the view that the discussions cannot be accurately or
fairly reflected by merely citing excerpts. Accordingly, the entire
text of the verbatim minutes pertaining to the subject property
follows.

[22] In brief summary, Atlantis filed its
application which was then reviewed and assessed by City planning
staff. Following the staff review and assessment the following steps
occurred:

Atlantis' application proceeded to Planning
Board, where Planning Board recommended to Council that Atlantis'
application move to the public consultation phase,

Council voted to proceed to the public
consultation phase,

a public meeting was held,

Planning Board then met to discuss the merits
of the application and voted to recommend Atlantis' request to
Council, and

Council voted to deny Atlantis' request.

[23] The Commission is of the view that Council
certainly may reach a decision different than Planning Board's
recommendation. Planning Board's recommendation is just that, a
recommendation, something to be considered seriously but not tying the
hands of Council. When Council follows Planning Board's recommendation,
it may fairly be said that in so doing, Council is adopting the
reasoning and analysis used by Planning Board. However, the Commission
is also of the view that when Council makes a decision against Planning
Board's recommendation, it is expected that Council clearly and
methodically set out its own thought process and analysis leading up to
its decision.

[24] In the view of the Commission, the record
suggests that despite the valiant efforts of the Chair of Planning Board
to direct discussion of the matter at hand, Council did not decide
Atlantis' application based on its respective merits or lack thereof.
Rather, the minutes reveal that Council appeared concerned that the
recommendation of Planning Board had been circulated to the media,
inquired whether compromise was possible and discussed the need for a
new waterfront plan.

[25] The verbatim minutes record a decision making
process in contrast with the direct and specific wording of section
28.5.1 of the Bylaw:

28.5 APPROVAL PROCEDURE

.1 In considering a Development Concept Plan
put forward by an applicant, Council Shall deliberate the quality of
architectural Design of all proposed Buildings, their compatibility
with the architectural character of adjacent Development, and the
extent to which the Development Concept Plan reflects the site
Development principles as set out in Section 4 of this By-law.

Deliberate ..., vb. (Of a court, jury etc.) to
weigh and analyze all the evidence after closing arguments <the jury
deliberated for 12 hours before reaching a verdict>.

[28] The Commission finds that there is nothing in
the City's Record or evidence to establish, on the civil standard of the
balance of probabilities, that Council met the requirements of section
28.5.1 of the Bylaw. The verbatim minutes of the November 14, 2011
meeting of Council fail to establish that Council deliberated what is
required under section 28.5.1 of the Bylaw. While other portions of
section 28 use the term "consider", section 28.5.1, by using the term
"deliberate", requires a process more rigorous than to "consider" a
matter.

[29] By disregarding the recommendation and thus
the reasoning of Planning Board and then failing to meet the procedural
requirement set out in section 28.5.1 of the Bylaw, the Commission
finds, on a balance of probabilities, that Council disregarded the
caution expressed by the Chair of its Planning Board and decided the
status of Atlantis' application based on a 'felt need' for a future new
waterfront plan rather than making a decision to accept or reject the
application based on the process and procedure contained in the existing
law: the existing Official Plan, the existing waterfront plan and the
existing Bylaw.

[30] As stated orally by the City's Counsel just
prior to calling his first witness, the nub of the City's position was
that Atlantis' proposed development was premature because the City was
about to embark on a grand plan for the waterfront arising out of the
500 Lot Study. This causes the Commission great concern. Simply put,
the merits of the application were sidestepped by a desire to develop a
new waterfront plan. This was irrelevant to the application put forward
to Council for determination and unfair to Atlantis.

[31] Counsel for the City urges the Commission to
be deferential to the decision of Council, citing a recent appeal to the
Prince Edward Island Court of Appeal.

[29] The appellant argued in his third ground
of appeal that the Commission erred by considering irrelevant
factors or by ignoring relevant factors. The appellant argued that
any consideration by the Commission of the reasonableness of
Council's decision caused the Commission to fall into error.

[30] As I stated previously in these reasons,
the Commission came to its own independent conclusion after
considering the evidence before it. The Commission found the
decision of Council to be reasonable, that is, that it was a tenable
and plausible decision and conclusion to reach in all the
circumstances. This, in no way, indicates the Commission was
deferring its decision without conducting its own independent
evaluation.

...

CONCLUSION

[37] I find in reaching its decision, the
majority of the Commission embarked on its own independent and
analytical review and judgment of the issues before it. The
Commission exercised its discretion properly, assessed the
appropriate factors and did not err in interpreting the Official
Plan of the City.

[33] The Commission finds that Council's
decision-making process erred in law as they failed to decide the fate
of Atlantis' application on its merits according to the process set out
in the present law. Further, the City's decision making process was
unfair to Atlantis as it proceeded to decide its application on an
irrelevant matter. Deference to a decision maker is earned when the
decision maker follows the process set out by the law and is fair to all
parties. The City followed its decision making process in Doiron
and thus earned deference from the Commission. In the present case,
however, the City's decision making process did not follow the process
required by the Bylaw and thus the Commission is unable to show
deference to the City's decision in the present appeal.

[34] The Commission will therefore review the
evidence before it to determine whether or not Atlantis' application
will succeed, thus deciding the matter anew as if it were the original
decision maker.

Testimony of Paul J. Madden

[35] Mr. Madden is the principal of Atlantis. He
has municipal council experience, having served for 18 years on a
municipal council in Newfoundland. He has been involved in the fields
of construction and development since 1980. Approximately 8 years ago
he was approached by the Charlottetown Area Development Corporation (CADC)
about the concept of establishing a spa in Charlottetown. He
subsequently developed the existing condominium/spa project. The
infrastructure (water, sewer, electricity transformers) for a second
building is in place and he contributed to the cost of such
infrastructure.

[36] Mr. Madden testified that in his view, the
City's rejection of his latest proposal for development is not based on
sound planning principles. He expressed concern that he never received
a reason for the rejection from Council. Don Poole, then the City's
Manager of Planning, informed him that the City wanted a vibrant
downtown, with developments that were open for business on a year round
basis. Mr. Madden noted that he offered to sell the unused land back to
CADC. Prior to pursuing the present project, he spoke with Philip
Wood. Mr. Wood suggested that he apply for a larger building, "apply
for 8 stories and they will give you 4".

[37] Mr. Madden told the Commission that Bill
Chandler designed the proposed building for the latest application. Mr.
Madden noted that he had some input in the design as well. He submitted
that they took design features of the existing spa/condominium building
and Founders Hall. The proposed building will be kept 60 feet away from
Founders Hall. It will also be stepped back so not to harm the
streetscape view.

[38] Mr. Madden testified that he never was
advised by the City or CADC of any restrictions or freeze on development
on the waterfront.

Testimony of William Chandler

[39] Mr. Chandler has been an architect since
1983 and established his own firm in 1992. He testified that Atlantis'
present proposal will feature small retail shops on the first level, a
mix of office and retail on the second level and apartments on the third
level. The project will be three stories high to be consistent with
nearby buildings. The building is approximately 40 feet wide. Open
space will be preserved to protect Founders Hall. The parcel was
approved for subdivision by the City. The infrastructure for the
project was 'roughed in'. He noted that the CDA zone is based on
flexibility. The pre-approved uses under the CDA zone are as of right
uses. There was a process to go through and Mr. Madden and he felt they
followed the required principles for the amendment process.

[40] Mr. Chandler believes that the present
project is consistent with the requirements of section 28 of the Bylaw.
He noted that that one of the present problems with the waterfront is
that it tends to become a 'ghost town' after Thanksgiving. Atlantis'
present proposal addresses this concern by providing a year round
development.

Testimony of Hope Gunn

[41] Ms. Gunn has been employed as a Development
Officer with the City since 2008. Ms. Gunn reviewed a chronology of
events (Exhibit R2-7) as well as other documents. Ms. Gunn reviewed
excerpts from the December 2011 500 Lot Study with respect to
development standards and design guidelines (Exhibit R3) noting the
Study included a recommendation for a waterfront plan. She also
referred to a December 2011 letter from the City's Mayor to CADC
requesting a delay or slowdown in further waterfront development
(Exhibit R2-6).

[42] On cross-examination, Ms. Gunn acknowledged
that the 500 Lot Study report was issued after the City's November 14,
2011 decision with respect to the subject property. She acknowledged
that Atlantis' proposed development was of a mixed use. She noted that
the City has changed its concept plan for the waterfront several times
and the City is on concept plan number 6 or 7 now. The present concept
plan is dated June 15, 2006 (Exhibit R2-8).

[43] Ms. Gunn described the CDA zone as a zone
where "anything goes as long as approved by Council".

Testimony of Laurel Palmer-Thompson

[44] Ms. Palmer-Thompson has been employed as a
Development Officer with the City since 2004. She has past experience
as a municipal councillor for another community.

[45] Ms. Palmer-Thompson explained that the CDA
zone is an innovative mixed use zone. She noted that the City has
designated certain important areas in the City with the CDA zone. The
CDA zone provides flexibility subject to a public process. The process
allows specific uses to be approved. Section 28 of the Bylaw sets out
the process to consider an amendment to a concept plan.

[46] Ms. Palmer-Thompson noted that most of the
time Council does follow the recommendation of Planning Board. However,
on this occasion Council did not follow Planning Board's
recommendation. She believes that Council was considering public
opinion, the importance of the area, the limited amount of land left on
the waterfront and the compatibility of proposed uses with existing uses
to achieve a good fit. She noted that the 500 Lot Study covered the
geographic area from south of Euston Street down to, and including, the
waterfront. She noted that the Study was concerned about fragmented
development and the need for a new comprehensive master plan for the
waterfront. She stated that staff's recommendation with respect to
Atlantis' application was a sound recommendation but felt that Council's
decision was also sound.

[47] On cross examination, Ms. Palmer-Thompson
stated that planners support infill development but Council had a bigger
picture in mind; the need for a new waterfront plan. She stated that
she would have probably made the same recommendation as Mr. Poole but
she endorses the development of a new waterfront plan. She acknowledged
that an application must be determined on the plan currently in place
and the factors in the Bylaw as of the date of application. She noted
that planners do not want to see land used as a parking lot on a long
term basis; rather, they favour development or, in the alternative,
green space. She also acknowledged that there is no interim planning
policy or moratorium in place affecting development on the waterfront.

Testimony of Philip Wood

[48] Mr. Wood is a seasoned land use planner who
has presented evidence to the Commission on numerous occasions and in
varying roles. Mr. Wood introduced his testimony by noting that he
reviewed the various documents submitted by the City as a witness
appearing for the City, rather than a witness engaged with the City.

[49] Mr. Wood commented on the need to re-develop
the City's waterfront in the 1970s. He commented that the approach
taken was similar to peeling an onion, as re-development starts one
begins to see more clearly with respect to the best use of a particular
property. He described the CDA zone as the "wait and see zone". He
noted that development in the CDA zone is inherently piecemeal and that
the CDA zone represents contract zoning. He noted that there is a need
to address traffic and pedestrian circulation on the waterfront. He
submitted that the subject property could be critically important to
achieving "flow". He noted that the City is about to commence a
comprehensive review of its Official Plan and the waterfront will be the
centrepiece of this review. He also noted the ongoing need for parking
and that until other parking has been provided for the City should be
reluctant to eliminate the subject property as a source of parking. He
also noted that parking lots can be very useful for festivals etc. He
stated that nobody owns a viewplane over another's property. That said,
there is a reasonable expectation of a viewplane because the property is
currently zoned as a parking lot. He referred to this concept as a
"vested viewplane".

[50] Mr. Wood stated that he felt that Council
made the right decision and that Council was not presented with options
by planning staff. He stated that a planner's role is to provide
information and a range of options to council. He acknowledged that
from the minutes it was difficult to "get into the councillors' heads".

[51] Mr. Wood offered his opinion that Mr. Madden
was the kind of developer that the City needed.

[52] Mr. Wood stated on cross-examination that
while infilling was important, viewplanes, open space and parking are
also important. He noted that councillors often forget the policies of
their official plans. He stated that he usually advises developers to
avoid CDA zones as the approval process is long and drawn out compared
to zones which allow for as of right development. He noted that he
interpreted the public meeting as a groundswell of opposition to
Atlantis' development proposal for the subject property.

[53] Mr. Wood stated on cross-examination that he
believed that Mr. Poole crossed over the line and became an advocate for
Atlantis. He felt that Mr. Poole discounted the views of the public at
the public meeting.

[54] On cross-examination, Mr. Wood acknowledged
that Mr. Madden had "showed up" at his office door. Mr. Wood noted that
Mr. Madden was frustrated and used colourful language. Mr. Wood does
not recall telling him to apply for a bigger building but it may have
been a tongue-in-cheek comment. Mr. Wood added that he was not retained
by Mr. Madden.

[55] Also on cross-examination, Mr. Wood noted
that he spent four hours discussing the history of this matter with Phil
Handrahan, the City's Director of Fiscal and Development Services. Mr.
Wood stated that Mr. Handrahan was interested in having him lend a hand
as they were short-handed.

[56] At the outset of the hearing, Counsel for
the City informed the Commission that Mr. Don Poole, Manager of Planning
and the City staff person chiefly responsible for the Atlantis
application file, was on extended leave and would not be called to give
evidence. At the request of Counsel for Atlantis, the Commission issued
a subpoena requiring Mr. Poole to appear, however he could not be
located and the subpoena was not successfully served. Following this
and upon hearing the evidence of the other City officials, Counsel for
Atlantis determined that Mr. Poole's testimony was unnecessary.

The Commission's Decision

[57] The Commission is mindful of Don Poole's
September 7 and November 7, 2011 reports to Planning Board and the
consideration given to Atlantis' application by Planning Board on
September 7 and November 7, 2011. Mr. Poole notes in his November 7,
2011 report:

The building would be stepped back between
Founders Hall and the Condominium building and not block viewscapes.
The building would be as mentioned a three story building allowing
for commercial store fronts and offices on the ground floor and
giving the building a commercial feel and would add to year around
occupation and activity just like the Spa next door.

...

This development, given it is between the
other two building[s], appears to be good infill development and
provides year round occupation and activity and is stepped back far
enough from Founders Hall windows to allow a future different use
for that building and use of the windows on this side. It is also
stepped back fro[m] views from Prince Street of the harbour.

[58] Planning Board agreed to recommend approval
to Council and offered its own reasoning, first in its September 7, 2011
report:

The proposed building will be long and
narrow because of easements on the property. Access will be one way
in under the building on the east side and egress will be from the
parking area at the rear of the building. The first floor of the
building will contain an office and washroom for the marina as well
as small retail shops. The second floor will be office space and
the third floor will have four residential units and possibly some
office space. Mr. Chandler reviewed the concept drawings and noted
that the building exterior will have the same elements as the
condominium building but with some peaked roof areas to break up the
building to look like individual buildings instead of one long
generic building. This is not a fixed design but will be fixed by
the time of the public meeting.

Planning Board then went on to say in its November
7, 2011 report:

The Board asked about the distances between
the proposed building and the existing condos and Founders Hall.
Mr. Chandler responded that the parking lots were designed to
reflect the width of City streets or approx. 65 feet. The Board
liked the design and the fact there will likely be more year-round
activity on the water front and felt it is better than a big parking
lot as in the existing waterfront plan.

[59] Section 3.5 of the Official Plan seeks mixed
use elements and encourages residential and commercial development, as
well as year-round usage of the waterfront and the protection of
viewscape characteristics both to and from the water.

[60] Ms. Palmer-Thompson stated that planners
support infill development and she would have probably made the same
recommendation as Mr. Poole. An application must be determined on the
plan currently in place and the factors in the Bylaw as of the date of
application. Planners do not want to see land used as a parking lot on
a long term basis; rather, they favour development or, in the
alternative, green space. She agreed with Council of the need for a new
waterfront plan.

[61] The Commission holds Mr. Wood in the highest
esteem for his planning knowledge and ability to explain difficult
planning concepts in an exceptionally easy to understand fashion, albeit
sometimes straying outside his field of expertise. However, on this
unique occasion, the Commission finds that it has to be cautious in
weighing Mr. Wood's evidence, as it appears that the City
unintentionally placed him in an awkward position by calling him as a
witness. The record before the Commission reveals that Mr. Wood had met
with Mr. Madden and had offered supportive advice, whether
tongue-in-cheek or otherwise. Mr. Wood prefaced his testimony by noting
that he was appearing for the City, rather than engaged by the City.
Yet, on cross-examination, Mr. Wood revealed that he had been asked by a
high ranking City staff member to "lend a hand" as the City was
short-handed. Mr. Wood's comments about Mr. Poole "crossing the line"
and becoming an advocate for Atlantis came across as a rather
presumptuous personal opinion. The Commission, having reviewed the
City's Record repeatedly, can find no objective evidence to support this
conclusion. Where Mr. Wood's evidence conflicts with Ms.
Palmer-Thompson's evidence, the Commission accepts the evidence of Ms.
Palmer-Thompson.

[62] The Commission has carefully considered the
requirements of section 28 and has deliberated on the requirements set
out in section 28.5.1 of the Bylaw. The Commission finds that the
evidence before it, including the reports prepared by the City's
planning professional, the recommendations of Planning Board and the
testimony of Mr. Chandler, support a determination that the quality of
architectural design of the proposed building is adequate, the proposed
building is compatible with the architectural character of the adjacent
development, in particular Founders Hall and the spa/condominium
development, and the development concept plan reflects the site
development principles set out in section 4 of the Bylaw. Both Planning
Board and Mr. Poole referred to Official Plan factors and the Commission
agrees that these factors are met with Atlantis' proposal. Accordingly,
the Commission finds that Atlantis' proposed development for the subject
property, as put forward by Planning Board, is consistent with sound
planning principles.

[63] Given the procedural error described
earlier, that is to say a failure to decide Atlantis' application on
its merits according to the process set out in the Bylaw (a procedural
error which strikes at the very heart of the City's decision), combined
with an unfair determination of Atlantis' application based on
irrelevant considerations, and given the evidence in support of the
requested amendment, the Commission finds that it is appropriate to
allow this appeal, quash Council's decision and substitute a decision
based on the recommendation of the City's Planning Board.

[64] Accordingly, the Commission hereby quashes
the City Council's November 14, 2011 decision (a decision expressed in
two resolutions) pertaining to the subject property, and orders the City
to amend Appendix "G" of the City of Charlottetown Zoning and
Development Bylaw - List of Approved Properties in the Comprehensive
Development Area Zone and Their Permitted Uses as well as an amendment
to the Waterfront Concept Plan to allow commercial, office and
residential units for the vacant lot adjacent to 4 Prince Street (PID#
841536).

4.
Disposition

[65] An Order allowing the appeal and
ordering the City to amend its Bylaw and its Waterfront Concept Plan
follows.

Order

WHEREAS

the
Appellant Atlantis Health Spa Ltd. has appealed a decision of the City of
Charlottetown dated November 14, 2011;

AND WHEREAS
the Commission heard the appeal at public hearings conducted in
Charlottetown on February 22, 24, 27 and March 5, 2012 after due public notice and suitable
scheduling for the parties;

AND WHEREAS the Commission has issued its findings in this matter in
accordance with the Reasons for Order issued with this Order;

2. The November 14, 2011 decision of the City
of Charlottetown pertaining to this matter is quashed, and the City of
Charlottetown is hereby ordered to amend Appendix "G" of the City of
Charlottetown Zoning and Development Bylaw - List of Approved Properties
in the Comprehensive Development Area Zone and Their Permitted Uses as
well as an amendment to the Waterfront Concept Plan to allow commercial,
office and residential units for the vacant lot adjacent to 4 Prince
Street (PID# 841536).

DATED
at Charlottetown, Prince
Edward Island, this 19th day of June, 2012.

12. The Commission may,
in its absolute discretion, review, rescind or vary any order or
decision made by it or rehear any application before deciding it.

Parties to this proceeding
seeking a review of the Commission's decision or order in this matter may do
so by filing with the Commission, at the earliest date, a written Request
for Review, which clearly states the reasons for the review and the nature
of the relief sought.

13.(1) An appeal lies
from a decision or order of the Commission to the Court of Appeal upon a question of law or jurisdiction.

(2) The
appeal shall be made by filing a notice of appeal in the Court of Appeal within twenty
days after the decision or order appealed from and the rules of court respecting appeals apply with the necessary changes.

NOTICE: IRAC File Retention

In accordance with the
Commission's Records Retention and Disposition Schedule, the material
contained in the official file regarding this matter will be retained by the
Commission for a period of 2 years.